AfCFTA: Franklin Cudjoe charges gov’t to review interest rate for local industries to compete
Ghana’s hosting of the Secretariat of the Africa Continental Free Trade Area (AfCFTA) would yield indigenes nothing if its interest rate remains same.
Government has therefore been charged to reconsider bringing the interest rate down.
These, are words of the founder and president of policy think tank, IMANI Africa, Franklin Cudjoe.
In a facebook post sighted by Ghanasonline.com, Mr. Cudjoe said other African nations are going to benefit from the AfCFTA at the expense of Ghanaians, considering the average interest rate Commercial banks would lend due to the current policy rate.
Even though Mr. Cudjoe lauded the Monetary Policy Committee for maintaining the policy rate, he believes the average interest rate of 23% from the commercial banks would be disadvantageous to local firms in competing with other countries within bloc — vis-a-vis their lower rates.
“The Monetary Policy Committee has maintained the policy rate at 14.2%. We congratulate them. However, this means your average interest rate from your commercial banks will be 23%. If you borrow domestically at this rate, you cannot compete with all imported products from the following African countries with their average lending rates: Morocco — 4.42%; Egypt– 8.25%; Algeria — 8%; Tunisia — 6.7%; Nigeria — 11.25%; South Africa — 7.25%; Ethiopia — 7%; Kenya — 12% [and] Bostwana — 5%,” the post stated.
He says if local industries borrow at a higher rate compared to other nations, their cost of production will be higher, thereby increasing the cost of the products as compared to other foreign producers who would move in their products freely.
Mr. Cudjoe added Ghana may house the AfCFTA Secretariat and be credited for its nice decoration, it can however, never compete with other countries on the market where it matters most.
“So, you can house the Secretariat of AfCFTA and adorn it with flowers from Koforidua for all we care, but when it matters most, your Ekumfi juice cannot compete with juice from any of the above countries on price,” he emphasised.
